FedEx Tech Chief Has a Drone of His Own

Amazon’s proposed Prime Air product, a pilotless flying vehicle that can deliver packages within a half hour of an order.

Amazon

By Laura Stevens

FedEx has a drone expert on staff: Chief Information Officer Robert B. Carter, who owns one.

“He reported that it can operate about eight minutes and carry about four Budweiser beers,” FedEx CEO and Chairman Frederick W. Smith said to laughs from other executives in the room during an earnings conference call Wednesday.

In all seriousness, FedEx has a lot of studies underway in the area of drones, Mr. Smith said. But he dubbed much of the recent reporting on the trend “mythology” and said it’s not likely we’ll see drones dropping off packages anytime in the near future.

“There are two enormous transportation networks that are built around moving light packages and freight, and they are FedEx and UPS. The size and scale of these operations are so big, that it’s almost amusing, some of the comments about delivering items by drones,” Mr. Smith said during the call.

Whether drones end up playing a role or not, the shipping industry is just at the tip of the iceberg when it comes to benefits from the explosion in online shopping, added Mike Glenn, President and CEO of FedEx Services. Online sales are expected to reach 10% of total retail sales in 2017, up from about 5% last year, according to a report by Forrester Research Inc. He also cited growth in traditional brick-and-mortar retailers shipping online orders in stores.

The biggest hurdle for e-commerce is that it’s expensive to deliver things to residences, Mr. Smith said. “Not every residence gets an item every day. And it’s quite unlikely that every residence will start getting an item every day,” Mr. Smith added. The U.S. Postal Service offers that service, but was developed to deliver only very light-weight items, such as letters.

“So, in certain situations, an Amazon.com, or some very large e-tailer, they can unquestionably do local deliveries should they choose to do so,” Mr. Smith said, ruling out drones for now. “But for the vast majority of products moved, it’s almost certain that they will … be moved by one of those three large networks and then some of the smaller regional players for as far as the eye can see.”